Braskem Rallies to Highest Since 2011 as Santander Says Buy

Julia Leite

April 25, 2013 — 5:30 PM EDTApril 25, 2013 — 5:30 PM EDT

Braskem SA, Latin America’s largest petrochemicals maker, rose to a 19-month high as Banco Santander SA joined Citigroup Inc. and JPMorgan Chase & Co. in raising the stock to buy after Brazil cut the industry’s taxes.

The shares gained for a sixth day, rallying 2 percent to 16.67 reais at the close of trading in Sao Paulo, the highest level since September 2011. The Ibovespa benchmark was little changed.

Santander’s analysts raised the stock to buy from hold, citing Brazil’s move to reduce taxes known as PIS and Cofins on raw materials used in the chemical industry. The measure, which cuts the levy to 1 percent from 5.6 percent, takes effect on May 1 and will be gradually restored through 2018, Finance Minister Guido Mantega told reporters in Brasilia on April 23.

“We do not believe this week’s positive PIS/Cofins measure announcement is fully priced in,” the Santander analysts wrote in a note to clients dated today. The government aid should support operating results, they wrote.

Shares of the Sao Paulo-based company have surged 30 percent this year as the Ibovespa slumped 9.8 percent.